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State agrees to pay out $3 million more for Glendale redevelopment obligations

A pedestrian walks by a piece of art by P. Williams on at 50 W. Broadway on Thursday, May 24, 2012. The artwork is part of the Glendale Area Temporary Exhibitions that was paid for by redevelopment funds.
(Roger Wilson/Staff photographer / January 2, 2013)

Although Sacramento lawmakers ended redevelopment in February, the Department of Finance is still giving roughly 400 defunct redevelopment agencies throughout California money to pay for previous obligations.

City officials lauded the news Monday. Without the money, the city could have been slapped with a lawsuit, adding another headache to the already complicated dissolution process.

Still, City Manager Scott Ochoa said that despite the money, more frustration is sure to come.

“We’re still having to fight for every inch of ground,” he said.

State lawmakers ended redevelopment, and the property tax income that came with it, in order to close a multibillion-dollar state budget gap. But as redevelopment winds down, the defunct agencies get money to pay for obligations in six-month increments.

Glendale’s most recent redevelopment battle was over two payments on a Union Bank loan that was used to develop Vassar City Lights, an affordable housing complex on San Fernando Road.

While Glendale’s allocation for January through July has increased from $11 million to about $14 million, it is still far below the $47 million the city originally asked for. The increase of nearly $3 million will cover two payments to Union Bank: one owed in the next six months and the other delayed last year.

More often than not, the state’s interpretation of “enforceable obligations” has differed from that of Glendale, leading to less money for paying off those obligations.

The bank could have sued the city over the loan repayment, causing concern among local officials.

At first the state denied the Vassar City Lights loan because it was made by the city’s affordable housing arm, not its former redevelopment agency. But state officials decided to honor it after they saw more documents proving the loan was indeed eligible for repayment, H.D. Palmer, a Department of Finance spokesman, said in an email.

Although losing redevelopment has been devastating for Glendale — it partially led to cutting municipal staff rolls to their lowest level since 2000 and put several projects, such as Central Library improvements on hold — city officials have won small battles along the way.

Los Angeles County auditor-controller officials changed their tune on blocking an $8-million payment after multiple meetings with city officials. And in October, the proposed Museum of Neon Art was on the line, but after some back-and-forth, the $5.2-million project made it past an oversight committee in charge of recommending payments to the Department of Finance.